Martin Marietta Materials launches US$4.7bn bid for Vulcan

14 December 2011

Martin Marietta Materials, a leading US maker of crushed stone and gravel, on Monday unveiled a hostile US$4.7bn takeover bid for Vulcan Materials Co after private negotiations failed.

Martin Marietta said it had delivered a tax-free stock-swap offer to US rival Vulcan “to create a US-based company that is the global leader in construction aggregates with a footprint reaching across North America.”

“We are bringing our proposal directly to Vulcan’s shareholders after Vulcan ceased participating in private discussions toward a negotiated transaction, which commenced over a year-and-a-half ago,” Ward Nye, Martin Marietta’s president and chief executive, said in a statement.

As of Friday, the combined company would have a market capitalisation at US$7.7bn and a total value of US$11.4bn, Martin Marietta said. The combined mineral reserves of the two companies would be 25.4bnt.

Under the terms of the buyout offer, Vulcan shareholders would receive half a Martin Marietta share for each share they own, representing a 15 per cent premium, the Raleigh, North Carolina-based company said.

It also pledged to maintain the dividend for the combined company at Martin Marietta’s current rate of US$1.60 per share annually.

“This dividend rate is 20 times Vulcan’s current level,” Nye said.

Nye, in a letter to Vulcan shareholders, said the tie-up was expected to generate “significant” cost synergies ranging from US$200m to US$250m as -overlapping functions were eliminated.

“Recent events, including the fragile state of the US economy, the lack of visibility as to when a sustainable recovery will take place and the uncertainty surrounding government spending on infrastructure projects, only strengthen the rationale behind a combination,” he said.
Published under Cement News